RBI partially lifts ban on HDFC Bank after 9 months, allows it to issue new credit cards

The Reserve Bank of India (RBI) on Wednesday relaxed the technology ban on HDFC Bank after 9 months as a penalty due to technical glitches.The central bank has allowed the private lender to issue new credit cards. However, RBI stated that its temporary ban on the lender for introducing new, digital initiative continues, reports said. 

The Reserve Bank of India had issued orders in December and February to HDFC Bank on certain incidents of outages in the internet banking /mobile banking/payment utilities of the bank over the past two years.

“As a further update to the above intimations, we wish to inform you that the RBI vide its letter dated August 17, 2021, has relaxed the restriction placed on sourcing of new credit cards,” it said in a regulatory filing.

The board of directors of the bank has taken note of the said RBI letter, it said.

The HDFC Bank said the restrictions on all new launches of the digital business generating activities planned under Digital 2.0 will continue till further review by RBI.

“We will continue to engage with RBI and ensure compliance on all parameters,” the bank said. Stock of HDFC Bank traded 2.06 per cent up at Rs 1,546.00 apiece on BSE.

HDFC Bank’s managing director and chief executive Sashidhar Jagdishan had said a month ago on July 17 that the bank has complied with 85 per cent of RBI’s asks on technology. He also said that the RBI ban on new digital launches over tech issues has impacted the business and the ball is now in the regulator’s court on when to lift the ban on issuing new credit cards.

“We have given a milestone to the regulator in terms of what are the things we are doing on technology, complying with their advisories and directives. We have covered a very significant portion as we speak. Almost 85 per cent of what we had to do has been covered,” Jagdsihan, who has been with the lender for over two decades and worked as the ‘change agent’ in the years leading to his elevation, said.

In December last year, the RBI had barred HDFC Bank from launching any new digital products or services and issuing new credit cards till the bank resolve the tech issues. HDFC was banned by the Central Bank as a penalty for repeated instances of outages in its online platforms.

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